Are workers’ compensation laws keeping up with changing demographics?

For more than twenty years I have been speaking about demographic change to workers’ compensation insurers in the hopes of spurring policy changes in advance of an aging workforce and greater numbers of older workers in the workplace.  To my regret, my presentations on “Demographic Effects”, while warmly received were not the catalyst for early and significant policy development. 

Population projections presented in the 1990s and early 2000s told us what was coming.  Now, the current census and population data growth confirm those projections. We new this was coming but many policies are still anchored in the past.

One key consequence of changing demographics in Canada, the US, and Australia is the increasing number of older workers in the overall population and the work force.  Workers’ compensation and occupational health and safety are not keeping pace.  The implications of demographic change are obvious:

•     More older workers in the workplace
•        More workers working beyond traditional retirement age
• 
         More co-morbidities and longer recoveries following work-related injury, illness, or disease

We new these issues were coming based on static participation  and employment rates (employment to population ratios) additional economic factors have amplified the trends:

•        Plummeting unemployment rates creating greater demand for retention of older workers
•        Skyrocketing living costs driving more workers back to the labour force
•        Rising job vacancies stoking demand for older worker recruitment and workforce re-entry.

Every corporate planner anticipated a pandemic would arise at some point.  The pandemic timing and its attack on older individuals added stress to a tight labour market:

•        Aging cohorts of healthcare workers hitting retirement age just as demand for their services peak
•        Industries like trucking/transportation with high average age have massive job vacancies, exacerbating supply chain woes
•        Quarantine, isolation, and other prevention measures to control risk to workers driving required work absence with inadequate mechanisms for their support

For older workers, particularly those age 65 to 69, employment rates are trending higher. In the US (source: US BLS Current Population Survey, quarterly, non-seasonally adjusted 2002 and 2022 extracted June 2022):

•       The employed non-farm labour force age 65 and over has increased by 2.5 times since 2002
•        Nearly 20% of persons 65 and older is now employed in the labour force
•        Nearly a third of persons aged 65 to 69 is employed
•        36.4% of males aged 65 to 69 are employed (Q1 2022) vs. 29.5% in (Q1 2002).

Canadian data reveals a similar pattern (Statistics Canada: Labour Force Characteristics – unadjusted - Table: 14-10-0017-01):

·       The employment rate of 65- to 69-year-old has more than doubled from under 13% to more than 26% (May 2002 to April 2022)

·       Employment rate of women aged 65 to 69 has increased more than 2 and a half times over the same period (May 2002 to April 2022)

State and provincial data often show even more dramatic shifts. Extracting provincial data from the same series, British Columbia has seen a massive shift in the employment of workers age 65 and older:

•       The monthly unadjusted BC employment rate of 65- to 69-year-olds now routinely exceeds 35%
•        More than a third of males (36.2% average) and a quarter of females (25.7% average)  age 65 to 69 are employed (Jan-Apr 2022)

A recent Australian study reflects similar increases in participation among older workers (Australian Institute of Health and Welfare (2021) Older Australians, accessed 10 May 2022):

•        Older Australians (aged 65 and over) had a workforce participation rate of 15% (19% for men, 11% for women).
•        The workforce participation rate of older Australians more than doubled (from 6.1% in 2001 to 15% in 2021) in the last two decades.
•        The participation rate for men 65 and over almost doubled (from 10% to 19%); for women aged 65 and over, the participation has almost quadrupled (from 3.0% to 11%).

The rapidly growing number of older citizens, record demand for labour, economic imperative of rising prices, and the social shift towards working later in life mean the workplace is seeing and will continue to see more older workers.

Many workers’ compensation systems impose limits on benefits for older workers.  Legislation developed twenty or thirty years ago may have reflected a social context that anticipated early retirement; “freedom 55” may have been a mantra decades ago.  Today’s data show the trend is much to the contrary:  working well beyond normal retirement is becoming both a societal expectation and an economic imperative for many older workers.

Most Canadian jurisdictions have some sort of age restriction on receiving workers’ compensation.  The duration of temporary total or partial disability is typically limited to two years following the date of injury for most workers age 63 and older, although there are exceptions for those with documented working plans or typical later retirements. Some jurisdictions have similar restrictions beginning a little later or providing longer duration (Quebec with age 64 and four years maximum) or a little earlier (Manitoba age 61).  Permanent disability provisions are increasingly limiting on-going financial support for workers over age 65 after prescribed duration limits but typically continue to cover disability-related medical and certain other perspectives. (See AWCBC, Workers’ Compensation – Temporary Total Disability Compensation, accessed June 16, 2016 from https://awcbc.org/en/summary-tables/benefits-and-rehabilitation/)

Most US jurisdictions do not have an explicit age limit on temporary total benefits, but many have other limitations on benefits that effectively truncate or permanent benefits for workers of all ages after a certain number of weeks (104 weeks in West Virginia, 312 weeks in Utah, 500 weeks in South Carolina as examples).

Permanent Total Disability may be paid for life or as long as the disability lasts ( see Wisconsin, South Dakota, Nebraska, and Iowa as examples) or have explicit duration limits (300 weeks in Alabama for example) or age limits linked to Social Security retirement ( as in Montana and Tennessee).

Some jurisdictions have evolved their coverage over time. In Minnesota, permanently disabled workers may receive benefits for life, to a presumed retirement age of 67 or 72, or for a term of 5 year depending on when the injury occurred.    

In many states, there are “settlements” or “compromise and release” arrangements (as in California) that may capitalize a present value award but typically factor in jurisdictional limits.  (See NASI, 2021 Workers’ Compensation Report – 2019 Data [Appendix D- Table D] – retrieved June 16, 2022 from https://www.nasi.org/research/workers-compensation/workers-compensation-benefits-costs-and-coverage/)

Australia’s coverage provisions under the individual state workcover schemes are varied.  Western Australia removed its restrictions in 2011, Queensland does not have a retirement provision per se but does have a five-year maximum provision.  Some states have a 12  or 24 month provision (New South Wales, Australian Capital Territory), or more complex provisions.  Take Victoria’s coverage of retirement provisions (as extracted from Safe Work Australia,  Comparison of workers’ compensation arrangements in Australia and New Zealand (2019), [Table 2.4e] as retrieved June 16, 2022):

Retirement age means the age at which the worker attains pension age within the meaning of the Social Security Act 1991 (Cth).  Under s171, workers are not normally entitled to payments under the Act after attaining retirement age, except in the following circumstances:

if injured within the period of 130 weeks before attaining retirement age or at any time after attaining that age, the worker is entitled to weekly payments for no more than the first 130 weeks of incapacity for work — s169, Workplace Injury Rehabilitation and Compensation Act 2013 or

           if worker’s incapacity after reaching retirement age relates to an injury suffered within the preceding 10 years and if the incapacity is due to inpatient treatment, the worker is entitled to weekly payments for a limited period of up to 13 weeks — s170, Workplace Injury Rehabilitation and Compensation Act 2013

It may be late in this demographic shift but not to late for workers’ compensation law and policy makers to come to grips with this reality.  Here are some suggestions:

1.        Review current law and policy through the lens of older workers to ensure needs are properly addressed.

2.       Recognize that with age often come co-morbidities and conditions that may extend recovery and claim duration that require additional time or treatment over the standard

3.       If legislation limits are triggered by ages such 61, 63, 65 or 67 or indirectly by a cited “social security” eligibility, revisit these limits and increase them at least for the population 65 to 70 where the data clearly show large increases in participation and employment rates.

A glance at the population pyramids as they stand now or projections for the next few decades show this shift is not over.  And unless the population under 50 grows naturally or through significant immigration, the participation of even greater numbers of older workers in the labour force is likely.  Hopefully, public policies can catch up and keep up with this workplace reality.